Journal of Financial and Quantitative Analysis Vol. 52 No. 3 2017
The Diminishing Benefits of U.S. Cross-Listing: Economic Consequences of SEC Rule 12h-6
Abstract
On Mar. 21, 2007, the U.S. Securities and Exchange Commission (SEC) passed Exchange Act Rule 12h-6 to make it easier for cross-listed firms to deregister from the U.S. market and escape its regulatory costs. Using difference-in-difference (DD) tests, we find that, on average, Rule 12h-6’s passage induced an increase in voting premium, a decline in equity raising, and a decline in cross-listing premium. These effects are observed for exchange-listed firms and for firms from countries with weak investor protection. We conclude that although cross-listed firms are still valued at a significant premium over non-cross-listed firms, the rule decreased the value of commitment to the U.S. regulatory system.
- DOI
- 10.1017/s0022109017000254
- Volume
- 52
- Issue
- 3
- Pages
- 1143-1181
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref